The royal standard of Iceland was established by Royal Resolution No. 23 of 5
July 1921, in which the flag is described as follows (in my translation of the Icelandic original): "The Royal flag is sky blue, and in it the
white Icelandic falcon, crowned with the Icelandic crown, and facing the hoist. The relationship between the breadth and the length of the flag is
18:25." (Source: Lagasafn. Gildandi lög íslenzk 1931, Reykjavík: Bókadeild Menningarsjóšs, 1932, p. 1617). Apparently, the Royal flag was only used
once during the visit of King Christian X to his kingdom of Iceland in 1921 and no model drawing or real flag has survived [see
Birgir Thorlacius: "Fáni Íslands og
skjaldarmerki, Andvari, 6 (NS), 1964, p. 49]. However, the flag is illustrated in some contemporary sources,
cigarette card albums among them.Jan Oskar Engene, 2 February 2002

Blue and white were considered to be the proper colours of Iceland.
As early as 1874, Sigurdur Gudmundsson had made a flag with a blue
field and a white falcon with wings stretched out. He flew it during a
Royal visit. The perched white falcon on blue was later officially the
Royal standard of Iceland. In the
Flaggenbuch of the German Navy (1939), the proportions of
the royal standard are given as 18:25. The illustration in this book
shows a golden royal crown above the falcon (it is not on the bird's
head). Most other sources I can find do not mention a crown. The arms
at least were almost certainly without it.
Jan Oskar Engene, 24 June 1996

Note that the Royal flag was based on the coat of arms of Iceland established in 1903: The white (naturalistic) falcon. When Iceland became a
separate kingdom in 1918, one of the first things undertaken by parliament was to give Iceland a new coat of arms. On
12 February 1919 the coat of arms was changed so that the shield showed the pattern of the national flag
of Iceland. The shield was supported by the four guardian spirits of Iceland - the dragon, the bird, the bull and the giant and surmounted by
the royal crown of Iceland. Except for the crown, these are still the elements of the coat of arms of Iceland, though the artistic rendering was
changed in 1944 when Iceland became a republic. The introduction of the 1919 coat of arms was in a way a snub to the king. The guardian spirits
shown in the coat of arms refers to a section of the Heimskringla by Snorri Sturluson (1179-1241), in which a Danish king tries to take Iceland but is
driven back by the four spirits guarding Iceland. One contemporary source noted that the "symbolism was not without clarity." So, when time came to
make a royal flag, the existing coat of arms, which was also based on the national flag, could not be used and the previous coat of arms, the falcon,
was used instead, though crowned with Iceland's own royal crown.Jan Oskar Engene, 2 February 2002

The office of the Regent was established by parliament on 16.
June 1941 to exercise the powers of the King. Half a year later, on 9. December 1941, the Regent used his powers
to establish a coat of arms and a flag for the office. The resolution of the Regent reads (in my translation from
the Icelandic): "The flag of the Regent of Iceland shall be the Icelandic state flag and in the middle of this
charged with a capital gold R on a rectangular panel." Model drawings of both the flag and the coat of arms of
the Regent accompanied the official announcement of the resolution in the government gazette (Stjórnartišindi, 1941, A.7, p. 279f).
As for the Regent's coat of arms, this was the flag patterned shield surmounted by the ornamental golden R.

When Iceland was proclaimed a republic on 17. July 1944, the office of Regent was replaced by that of the President.
The first thing the president did was to sign the laws on the flag of Iceland, which also provided for a customs and post and telegraph flag without crowns.
Jan Oskar Engene 2002-12-16